Brown v. Jacob

454 N.W.2d 226, 183 Mich. App. 387

• Court: Michigan Court of Appeals
• Decided: April 16, 1990
• Docket: Docket 113275
• Status: Published

Opinions

Reilly, J.

Defendant/counter-plaintiff Jesse Jacob appeals by leave granted from the circuit court order affirming the district court’s dismissal of his counterclaim against plaintiff/counter-defendant Harold G. Brown, Sr. We affirm in part and reverse in part.

In July of 1986, Jacob apparently phoned Brown requesting an estimate for several nonemergency home repairs.¹ On August 29, 1986, in response to the invitation, Brown made an on-site inspection at Jacob’s home. While Brown was still in the house, he and Jacob entered into a written contract whereby Brown agreed to make the repairs in exchange for $6,200. Jacob gave Brown a $3,000 deposit. The contract did not provide that it could be cancelled within three days of its execution and did not contain a "notice of cancellation” as required by the home solicitation sales act (hssa), MCL 445.113; MSA 19.416(203).

Jacob eventually became dissatisfied with Brown’s work and notified Brown that he should cease work on the project._

On November 6, 1986, Brown commenced the underlying breach of contract action demanding the remaining balance due under the contract. In response, Jacob filed a counterclaim seeking damages for breach of contract, negligence and misrepresentation as well as relief under the Michigan Consumer Protection Act, MCL 445.901 et seq.; MSA 19.418(1) et seq. Jacob also alleged that he was entitled to a refund of his $3,000 deposit pursuant to the hssa.

Jacob then moved for summary disposition on the basis that Brown was precluded from bringing an action to recover the remaining balance since the underlying contract did not comply with the hssa. MCL 445.117; MSA 19.416(207). On August 3, 1987, the district court granted Jacob’s motion. However, the district court also dismissed Jacob’s counterclaim, finding that the hssa did not entitle Jacob to a refund of his deposit. The district court did not articulate the basis for its dismissal of Jacob’s negligence, breach of contract and misrepresentation claims.

On Jacob’s appeal to the circuit court, the sole issue presented was whether Jacob was entitled to a refund of his deposit. Brown argued that he was entitled to keep the deposit under the theory of quantum meruit. The circuit court adopted Brown’s argument and found that "the district court’s decision [was] supported by competent, material and substantial evidence on the whole record.”

i

Jacob now contends that the circuit court erred in affirming the district court’s determination that he was not entitled to a refund of his deposit. We agree.

The hssa defines "home solicitation sale” as

a sale of goods or services of more than $25.00 in which the seller or a person acting for the seller engages in a personal or telephone solicitation of the sale at a residence of the buyer and the buyer’s agreement or offer to purchase is there given to the seller or a person acting for the seller. Home solicitation sale does not include ... a sale made pursuant to prior negotiations between the parties at a business establishment at a fixed location where goods or services are offered or exhibited for sale. [MCL 445.111; MSA 19.416(201).]

The hssa also provides that one who solicits a contract of goods or services of more than $25 at the residence of the buyer must provide the buyer with a written notice that the contract may be cancelled within three days of its execution. MCL 445.113(1); MSA 19.416(203)(1).² Until the seller provides the statutorily required notice, the buyer may rescind the contract by notifying the seller in any manner of his intention to rescind. MCL 445.113(4); MSA 19.416(203X4). Moreover, once a buyer cancels a sale, the seller must return any payment the buyer has made within ten days of the cancellation. MCL 445.114(1); MSA 19.416 (204)(1). A seller has twenty days after the cancellation to demand the return of any goods delivered. Failing to do so, the goods become the property of the buyer without obligation. MCL 445.115(1); MSA 19.416(205X1).

While it is acknowledged that Jacob invited the estimate by calling Brown, all subsequent negotiations occurred at Jacob’s home. There is no evidence offered nor does Brown contend that he was approached at a business establishment at a fixed location where goods or services were offered or exhibited for sale. Nor does Brown contend that the sale was made pursuant to prior negotiations between the parties at such a business establishment. MCL 445.111; MSA 19.416(201). Therefore, the hssa is applicable. Because the contract did not contain the statutorily required "notice of cancellation” Jacob was entitled to rescind the contract. Although the circuit court expressed some concerns about consumers obtaining a windfall when they are permitted to rescind a contract once performance has begun, the clear and unambiguous language of the statute provides that a seller is not entitled to compensation for services performed before the contract’s cancellation. MCL 445.115(2); MSA 19.416 (205)(2).³ Accordingly, the circuit court erred in affirming the district court’s determination that Jacob was not entitled to a refund of his deposit. We reverse.

ii

Jacob also contends that the circuit court erred in affirming the dismissal of his breach of contract, negligence and misrepresentation claims. These issues were not properly preserved for appeal. Therefore we decline to review them.

In summary, we reverse the circuit and district courts’ determination that Jacob was not entitled to a refund of his deposit. We affirm the dismissal of Jacob’s alternative theories of liability.

R. B. Burns, J., concurred.

1 We note that our development of the precise factual history was hampered by Jacob’s failure to provide this Court with complete transcripts of the parties’ deposition testimony.

2 MCL 445.113(1); MSA 19.416(703X1) provides:

(1) In a home solicitation sale, unless the buyer requests the seller to provide goods or services without delay in an emergency, the seller shall present to the buyer and obtain the buyer’s signature to a written agreement or offer to purchase which designates as the date of the transaction the date on which the buyer actually signs.

The agreement or offer to purchase shall contain a statement substantially as follows in immediate proximity to the space reserved in the agreement or offer to purchase for the signature of the buyer:

"You, the buyer, may cancel this transaction at any time prior to midnight of the third business day after the date of this transaction. See the attached notice of cancellation form for an explanation of this right.”

3 MCL 445.115(2); MSA 19.416(205X2) provides:

(2) If the seller has performed any services pursuant to a home solicitation sale before its cancellation, the seller is not entitled to compensation.